The Effect of Uncertainty of Oil Revenue on Exchange Rate In Iran
Subject Areas : Financial EconomicsMahmod Khataee 1 , Roya Sayfipour 2
1 - Assistant Professor of Allameh Tabatabaie University
2 - Assistant Professor of Islamic Azad University ,Central Tehran Branch
Keywords: exchange rate, GARCH, uncertainty, OIL REVANUE,
Abstract :
Oil revenue is the major source of foreign exchange revenues in Iran economy. Since the oil sector managed by the government, the exchange rate in Iran is highly affected by the government decision. Also oil revenue is a function of oil price and its world demand. So the Iranian economy was fluctuated by uncertainty in the amount of oil revenue. Consequently uncertainty should have the major role in determining exchange rate. The main aim of this article is to analyses main factors of determining exchange rate including uncertainty in the market. For this purpose , future equilibrium exchange rate is estimated based on the assumptions of two scenarios including uncertainty factors. Comparing the equilibrium and controlled exchange rate shows that there is a high deviation between current rate and equilibrium exchange rate which will create a sharp increase of exchange rate in the future.
